Industrial Relations Code 2020: Scheme and Key Definitions

The Industrial Relations Code, 2020 replaces the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947. It governs collective relations at work: unions, standing orders, the resolution of disputes, strikes and lock-outs, and lay-off, retrenchment and closure. Its protections turn on a few definitions, most carried over from the Industrial Disputes Act with the case law built around them. This note sets out the scheme of the Code and its key definitions.

1. Structure of the Code

Figure 1: Fourteen chapters, 104 sections

• Schedules. The First Schedule lists matters to be covered by standing orders, the Second lists unfair labour practices, and the Third lists conditions of service for which notice of change is required.
• Repeal, s.104. Repeals the three earlier Acts, saving action taken under them.

2. Industry, Section 2(p)

Figure 2: Elements of the definition

• Bangalore Water Supply v A. Rajappa (1978). A seven-judge Bench gave the triple test: systematic activity, co-operation between employer and employees, and production or distribution of goods or services. Charitable bodies, professions and clubs could be industries, and only sovereign functions stood outside.
• The Code's response. The Code keeps the triple test and the rule that capital and profit are irrelevant, but expressly excludes charitable, social or philanthropic institutions, sovereign functions and domestic service.
• Pending reference. In State of UP v Jai Bir Singh (2005) a Constitution Bench doubted Bangalore Water Supply and referred it to a larger Bench.

3. Industrial Dispute, Section 2(q)

Figure 3: Elements of an industrial dispute

• Dimakuchi Tea Estate (1958). A dispute concerning any person is an industrial dispute only if the workers have a direct and substantial interest in that person's employment.
• Individual disputes. Earlier, an individual dispute needed espousal by a union or a body of workers, except for disputes over discharge and similar matters under s.2A of the 1947 Act. The Code now includes these disputes within the definition itself.

4. Other Key Definitions

• Worker, s.2(zr). Excludes the Armed Forces, police and prison staff, persons mainly in managerial or administrative capacity, and supervisors drawing over ₹18,000 a month; includes working journalists and sales promotion employees (Topic 3)
• Industrial establishment, s.2(r). An establishment in which an industry is carried on.
• Strike and lock-out, s.2(zk) and (u). Strike is concerted cessation or refusal of work, now including mass casual leave by half the workers; lock-out is the employer's temporary closing of the place of work, suspension of work or refusal to employ (Topic 15)
• Lay-off, retrenchment and closure, s.2(t), (zh) and (h). Retrenchment is termination for any reason whatsoever other than punishment, excluding voluntary retirement, superannuation, non-renewal or expiry of a fixed term contract, and termination for continued ill-health (Topic 16)
• Fixed term employment, s.2(o). Engagement on a written contract for a fixed period, with parity of wages and benefits (Topic 17)
• Settlement, s.2(zi). A settlement reached in conciliation, or a written agreement between the employer and workers signed in the prescribed manner (Topic 14)

5. Frequently Asked Questions

What is the triple test for an industry?

Laid down in Bangalore Water Supply and Sewerage Board v A. Rajappa (1978), it asks whether there is a systematic activity, organised by co-operation between employer and employees, for the production or distribution of goods or services to satisfy human wants. The IR Code retains this test but excludes charitable, social or philanthropic institutions, sovereign functions, domestic service and notified activities.

Is an individual's termination an industrial dispute under the IR Code?

Yes. Section 2(q) includes any dispute between an individual worker and the employer connected with or arising out of discharge, dismissal, retrenchment or termination, so no union needs to espouse it.

6. Related Topics

• Topic 3: Common Concepts Across the Codes. Worker and employee.
• Topic 11: Trade Unions. Chapter III.
• Topic 14: Dispute Resolution Machinery. How industrial disputes are resolved.